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Credibility for Sale: the Effect of Disclosure on Information Acquisition and Transmission

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Author Info
Li, Ming () (Concordia University)
Tymofiy Mylovanov () (Penn State University)

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Abstract

We study the effect of disclosure on information acquisition and transmission in a dynamic reputation model. In each period, to make a report to a client, an expert chooses between conducting a costly investigation or channeling a message from an interest group. We show that not disclosing the source of the expert's report may increase the frequency of investigation by the expert. Nevertheless, it decreases the quality of the clients' decisions. We demonstrate that, however, when the importance of decisions vary across time, when the interest groups are long-lived, or when the expert's clientele is growing in her reputation, nondisclosure may improve the quality of the clients' decisions.

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Publisher Info
Paper provided by Concordia University, Department of Economics in its series Working Papers with number 09008.

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Length: 36 pages
Date of creation: Feb 2009
Date of revision: Oct 2009
Handle: RePEc:crd:wpaper:09008

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Related research
Keywords: information acquisition; information transmission; reputation;

Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

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  2. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August. [Downloadable!] (restricted)
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  3. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
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  16. Jeong-Yoo Kim, 1996. "Cheap Talk and Reputation in Repeated Pretrial Negotiation," RAND Journal of Economics, The RAND Corporation, vol. 27(4), pages 787-802, Winter. [Downloadable!] (restricted)
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  18. Wei Li, 2007. "Changing One's Mind when the Facts Change: Incentives of Experts and the Design of Reporting Protocols," Review of Economic Studies, Blackwell Publishing, vol. 74(4), pages 1175-1194, October. [Downloadable!] (restricted)
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This page was last updated on 2009-11-16.

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